Budget priorities prompt layoffs at Powell Valley Healthcare

Four people laid off, more layoffs coming as part of plan to cut spending and position hospital for the future

Four Powell Valley Healthcare employees lost their jobs last week as the organization began identifying positions that could be cut to help reduce salary costs.

PVHC executive director Bill Patten said people laid off will be given severance packages and encouraged to apply for positions that open up in the future. In fact, Patten said, one of the employees who was laid off already has been rehired to fill another position.

Powell Valley Healthcare employed 493 people as of the end of August.

The reduction in force is part of a larger effort to cut $1.8 million in spending for the current fiscal year, which began July 1. While that goal was identified during the budgeting process this spring, at that time, two key vice president positions were filled by interim personnel. Patten said he waited until his new chief finance officer and vice president of patient care services came on board to begin identifying which positions could be cut.

The layoffs are necessary to improve the organization’s bottom line, he said.

“For this next year, we budgeted a bottom line of 5 percent, or $2.3 million,” Patten said.

But that’s a far cry from the $200,000 the organization made in fiscal year 2012 that ended June 30, and the $1.1 million loss the year before.

That money is needed to remain financially viable, to buy up-to-date medical equipment, to remodel and update facilities and to provide training and resources for employees.

Patten stressed that patient care will not be compromised by the layoffs, which will be concluded by mid-October at the latest.

“We’ve asked our department heads and medical staff to think about positions that can be eliminated, reduced, split or combined, temporary positions that we can not fill, or think of new and different ways of accomplishing what needs to be done without affecting care of the patient,” he said.

For instance, Patten said, when the PVHC quality risk director resigned recently, Pharmacy Director Tim Seeley was moved into that position. Seeley’s former position was advertised, and Steven Hultgren, employed as a pharmacist, was chosen to head the Pharmacy Department and those positions were combined.

“Pharmacists are high-paid positions, so that will save a lot of money,” Patten said.

Not a new problem

Patten said staffing in the organization has been discussed for years.

“This isn’t something that just came up. I think that, in the past, we nibbled around the edges on the topic,” he said. “If you go back quite a few years, when the organization was very healthy, positions were added just because we could afford them, not because there was a strong justification (for them).”

That’s not the case anymore.

“I’m not meaning to throw past CEOs under the bus,” Patten said, “but I’m really getting serious about it, partly because we have really established a vision about why it’s really important that we be financially viable. It’s not just so we can have a big bottom line.”

Patten said he and his team will “do all we can to keep this from happening again.”

“We are going to be just really aggressive on reviewing replacement requests and new position requests so that we don’t find ourselves in the same place as we are right now. We’re doing very difficult surgery here, removing part of our organization; we do not want to have to do the surgery again.”

He added, ”I understand we can only cut so much. If you cut, eventually, you’re going to get bone and muscle. So we need to grow our volumes. ... We’ve set some modest targets for our physicians for a modest increase (in patient volumes) that we’d like to see.”

Layoffs because of Cardwell?

Patten said people have asked if the layoffs are necessary because of the nearly $850,000 allegedly embezzled by former CEO Paul Cardwell.

His response: “If we had the money from Cardwell, we would still be doing this.”

While the loss of that money did affect previous years’ bottom lines, “now it’s just about cash in the bank,” he said.

Powell Valley Healthcare has enough reserves to continue operating for about 30 days. This year’s goal is to increase that to about 68 days.

Patten said it costs about $130,000 to operate Powell Valley Healthcare — the hospital, clinic, Express Care, long-term care center, assisted living and home health service — for one day.

“So Paul took seven or eight days in cash,” he said. “When you think that if we’re in the low 30s now, and our goal is to double it ... you can see that there’s still lots more to do.”

Layoffs and other operational cuts are not the only strategies being used to achieve that 68-day goal, Patten said. Another is to decrease the amount of money owed to Powell Valley Healthcare in accounts receivable, in part by getting bills out earlier.

Currently, money owed in accounts receivable equals about 78 days cash, he said.

“We want to pull at least 20 days of cash out of (accounts receivable)” by bringing the total number of days’ cash down to the high 50s, he said.

Planning for the future

Even as Powell Valley Healthcare begins layoffs, Patten and his management team are planning to launch “Journey to Excellence,” an employee motivation and training project designed to improve patient outcomes and enhance the patient experience, to increase employee morale, to provide training and resources to enhance employee performance, and to improve the organization’s financial outlook. Kickoff is slated for later this fall.

“We’re always focused on clinical excellence; now we want to enhance that by (providing) a very good experience: ‘Not only did my surgery go well, but I also was treated real well. My family and friends were cared for; my role in decision making was respected.’ — those sort of things,” he said.

The Powell Valley Healthcare board in July approved Patten’s proposal to contract with Studer Group, a firm that helps healthcare organizations excel in clinical, operational and financial outcomes. Patten told the board he wanted to use the firm as a resource to help the organization heal from events of the recent past and move forward in a positive direction.

In addition, Powell Valley Healthcare has hired Davis Partnership, based in Colorado, to update the organization’s facility master plan.

Patten said some people have asked if both projects could be set aside to avoid laying employees off.

The short-term answer would be yes, Patten said, but added, “In the long term, it would be the wrong strategy.”

“We’re trying to put together a strategy for long into the future,” he said. “In order to do that, we have to do the master plan.

“In order for us to enhance both the clinical outcomes, but also the patient experience, we need to get better. So, in the short term, we could same money by not doing the Journey to Excellence, but I think that would be a great example of being penny wise and pound foolish.”

Layoffs never easy

Patten said he knows layoffs are painful, and they’re not easy for anyone. He has asked for position cuts to be identified by the end of September and layoffs made by the second week of October to limit stress for employees.

“We want to be able to remove that doubt, that uncertainty, from our employees’ minds,” he said. Meanwhile, “I’m trying to provide a little extra assurance and understanding to our employees and communicating as completely and thoroughly as we can.

“Some people assume that CEOs or senior leaders make hard decisions every day; it’s like water running off a duck’s back; no big deal. I can tell you that, for me and my team, that’s just not the case.

“While we know we’re responsible for making the difficult decisions, we also know that our decisions affect the lives of co-workers, many of whom are our friends. And, as difficult as that is, I am proud that my team has stepped up to the plate and has done the hard work.

“At the end of the day, I would hope that the community would recognize that as well.”

Patten said he recently testified before the Wyoming Legislatures Joint Health and Social Services Interim Committee. In that testimony, “I told them I understood that when we cut $1.8 million out of our salary, that we actually contribute to the unemployment challenges of our county. It’s our belief that that’s a short-term effect, and that, after we stabilize our financial picture, we will be able to reclaim positions ... and our economic status.”

Patten said he likens the layoff situation to a quote from Spock from the Star Trek 2 movie: “The good of the many outweighs the good of the few, or the one.”

His message to employees: “I see one of my main jobs is to see that you have a stable job; if I need to lay off a few to make sure the remaining jobs are stable, that’s what I need to do.”

2 comments

posted by clipstein

September 21, 2012 8:46 am

yep the public pays again for their incomptence..... lost 850 grand and we pay.. they make mistakes we pay anyway...
they can come in your business, you make a mistake you pay..... But they are above God and can do no wrong in their minds....you rasie money for Aux. and they cannot even say thank you. raise money for free clinic and it takes 18 months to get a thank you...Wow nice people.... then they wonder why people are moving......